Oil shale, which is an organic-rich fine-grained sedimentary rock, contains significant amounts of kerogen (a solid mixture of organic chemical compounds) from which liquid hydrocarbons can be extracted. Kerogen requires more processing to use than crude oil, which increases its cost as a crude-oil substitute both financially and in terms of its potential environmental impact. US Secretary of the Interior Ken Salazar and Bureau of Land Management Director Bob Abbey announced today that they will take a fresh look at commercial oil shale rules and plans issued under the previous Administration and, if necessary, update them based on the latest research and technologies, to account for expected water demands in the arid West and to ensure they provide a fair return to taxpayer.

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The largest deposits of oil shale in the world occur in the United States in the Green River Formation, which covers portions of Colorado, Utah, and Wyoming; about 70% of this resource lies on land owned or managed by the United States federal government.

Mining oil shale involves a number of potential environmental impacts, more pronounced in surface mining than in underground mining. They include acid drainage induced by the sudden rapid exposure and subsequent oxidation of formerly buried materials, the introduction of metals into surface-water and groundwater, increased erosion, sulfur-gas emissions, and air pollution caused by the production of particulates during processing, transport, and support activities.

There are also concerns over the oil shale industry's use of water. Depending on technology, above-ground retorting uses between one and five barrels of water per barrel of produced shale-oil. A 2008 programmatic environmental impact statement issued by the US Bureau of Land Management stated that surface mining and retort operations produce 2 to 10 US gallons of waste water per 1 short ton of processed oil shale. In situ processing, according to one estimate, uses about one-tenth as much water.

"For more than a century, and through many busts, we in the West have been trying to unlock oil shale resources to help power our country," said Secretary Salazar. "If we are to succeed this time, we must continue to encourage RD&D, determine whether the technologies would be viable on a commercial scale, and find a way to develop the resources in a way that protects water supplies in the arid West. With commercial oil shale technologies still years away, now is the time to ensure that our rules and plans reflect the latest information and will deliver a fair return to the American taxpayer."

In November 2008, the previous Administration amended 8 of the land use plans in Colorado, Utah, and Wyoming to make public lands available for potential commercial-scale oil-shale development, and two other land use plans to expand the acreage available for potential tar-sands leasing in Utah, where these resources are located. These actions made nearly 2 million acres available for potential development. It also issued regulations that fix the royalty rate for oil shale at 5% for the first 5 years of commercial production, rising 1% every year thereafter until the rate reaches a possible maximum of 12.5%.

Abbey said that over the coming months, the public will have an opportunity to provide input on whether to update the existing commercial oil shale regulations. As more is known about emerging oil shale technologies, there may be specified resource protection plans as an example.

Secretary Salazar noted that the Government Accountability Office (GAO) recently determined that several fundamental questions about oil shale technologies remain unanswered, including critical questions about water demands. An October, 2010 GAO report determined that: "Oil shale development could have significant impacts on the quality and quantity of water resources, but the magnitude of these impacts is unknown because technologies are years from being commercially proven, the size of a future oil shale industry is uncertain, and knowledge of current water conditions and groundwater flow is limited."

Director Abbey said the BLM will also conduct further environmental analysis to determine whether to amend existing land use plans for oil shale and tar sands resources. The public process associated with the planning initiative will allow the Department to take a fresh look at what public lands are best suited for this kind of development.